Guest Post: Solving the riddle of returns

This is a guest post written by Matthew Robertson, Co-CEO of NetDespatch Ltd. Matthew looks at the riddle of returns following the so called ‘Takeback Tuesday‘, the busiest day of the year for returns after the Christmas period when everyone returns to work.

Tackling the trials of “Takeback Tuesday” to solve the riddle of returns

As workers headed back to their desks on Tuesday 2 January they did so bearing (unwanted) gifts – the estimated record 15-20% of purchased goods destined to be returned to online retailers following the festive season. Already suffering from the January blues after the fun of the holidays, customers are not in the best frame of mind to deal with the trials of what has been dubbed “Takeback Tuesday”; they simply want to be able to return their goods for a refund or replacement with the minimum of effort.

For retailers, their success in handling the increasing volume of product returns is becoming a critical competitive challenge that can make or break their reputation. Add to this the sheer resources needed to process returns on this scale and it’s clear that sharpening up the reverse supply chain will be a priority that continues to top retailers’ agendas.

The riddle of returns

We all love the convenience of online shopping, the ability to buy whatever we want, wherever we are and have it delivered to our homes at a time that suits us. Retailers are becoming increasingly adept and flexible in offering delivery days, times and locations that fit in with consumers’ busy lives. This builds customer loyalty and encourages repeat purchases based on the quality shopping experience they deliver. However, higher customer service expectations can be a double-edged sword, because when it comes to returning unwanted items a poor returns process can cause the relationship to sour very quickly.

The psychology of returns – risks and opportunities

Let’s take a look at the psychology of product returns. When a customer decides to send a product back they enter the realm of disappointment, which is a risky landscape for any retailer. Their product has failed to satisfy. Indeed, research we carried out among consumers showed that 76% of returns are initiated because the product was faulty or not fit for purpose. This means that the retailer is on the back foot and the debt is suddenly reversed – the customer is owed a refund.

The process of return and refund is both a risk and an opportunity for the retailer. The risk is that the method will be complicated and time-consuming for the customer, harming the brand still further. The opportunity is that the company can mitigate the disappointment by providing a process so straightforward that it will actually encourage the customer to buy from them again.

Fast, simple and free

Here at NetDespatch we have undertaken research around returns. Our research has shown that above all customers are looking for speed and transparency. 53% of customers expect to be refunded between 24 and 48 hours after initiating the return, ideally with the facility to track their parcel back to the retailer. That’s a lot of logistical work in a short space of time and leaves zero room for error. On top of this, thanks to the lead taken by companies such as Amazon and ASOS, free returns are now the norm. With returns to online retailers costing an estimated £20 billion per year they a costly part of doing business that cuts heavily into profitability, yet customers don’t expect to pay for the privilege of returning goods that they don’t want.

This is another layer to the challenge for retailers. They must deliver a convenient, transparent and speedy returns process for the lowest possible cost to themselves. Doing this successfully requires planning the potential returns process from the moment the customer places their order. In fact, emphasising the ease of making returns on the product page at the point of purchase sets the tone for a stress-free process. Our research also highlighted the pressing need for retailers to further educate consumers about all the different returns options that are now available to them. I believe that this lack of understanding around returns means that consumers are opting for the more traditional options which are not always the most convenient or practical. In today’s 24/7 world, surely waiting at home for a courier to collect a parcel is time that consumers would prefer spending on more productive tasks.

Returns have to be as convenient as possible. This means reusable packaging, pre-printed returns labels for a variety of channels and clear instructions for customers – both in-parcel and easily available online – to eliminate confusion. Our research showed that the majority of customers prefer to return goods via the Post Office which was strongly preferred over options such as waiting at home for a courier to pick up the package, or delivering it to a local convenience store. As stated earlier I believe this indicates a lack of education around the returns options and also something important about customer’s attitudes towards returns: they want to trust the delivery channel so that they can demonstrate proof of posting and that their parcel will reach its destination and that they’ll get their refund.

When the returned goods reach the distribution centre, speed and accuracy is paramount. Automated scanning of intelligent labels and supplementary information, such as the reason for the return, ensures that goods are appropriately managed and customer accounts are credited with a refund, or a replacement is arranged, in the shortest possible time. Using automation to manage the majority of the process reduces the likelihood of errors introduced by manual data handling and ensures a lower cost and more streamlined system. With the volume of returns only likely to increase as online shopping continues to skyrocket, getting this right is business critical for companies that need to remain competitive.

While it can’t promise to cure the January blues, making the returns process as painless as possible is a chance for retailers to make ‘Takeback Tuesday’ into an opportunity to impress their customers with the quality of their service and generate brand loyalty on which to build their future revenues.

james

10 months ago

yet another article that vaguely suggest the answer to all problems is an infinite bucket of money, well yes that does solve lots of problems, but if we all had infinite buckets of money, we probably wouldn’t be wasting time running e-commerce stores, would we?
not a single mention of cost anywhere, just keep throwing money at better and better service until you’re bankrupt? where’s the line? according to this article there is no line.
they’ve bothered to get figures of what percentage of customers wish to use the post office…. and that’s helpful how? what i want figures of is cost vs return. you’re telling us all that increasing our costs will mean a profit in the long term, well where’s the proof? where’s the figures? what return will it get? does throwing even more money into returns reap even more profits? again, where is the line???

so many times you say COMPANIES NEED TO, well what happens if they don’t?
do you have any case studies to offer, or is this completely speculation and personal opinion? because speculation and personal opinion ain’t worth jack, no matter how long-winded an article you make of them.

“research we carried out among consumers showed that 76% of returns are initiated because the product was faulty or not fit for purpose. ”
-who’s we? did you do the survey yourself?
-why are you surveying consumers for this?
-do you make any attempt to receive ACCURATE figures at all? or just take whatever number is thrown at you?
– i’d go so far as to say, with the evidence provided, this is a junk number someone’s plucked out of thin air, and called research.

why don’t i take a crack at it?
“I did research, which told me that 98.3% of customers want items delivered by air, so retailers MUST invest heavily in drones. all of you. just buy hundreds and hundreds of drones. don’t stop buying drones. you’re already aware amazon do it so why don’t you? more drones is the answer!”
– article by James’ drone sales ltd.

no reason a company operating a shipping company would suggest upping your shipping costs, is there?

helpfulness of article to real people: 0/10

Returns

10 months ago

James hit the nail on the head

This is a useless article !

Why not talk about ways companies reduce returns ?

The government needs to change the law on returns and force Amazon/ebay to implement 7 day returns. Plastic tad from china will end up filling land fill sites in the end .

No one is studying the impact of used stuff

Jason

10 months ago

Good article that.

Almost as good as James’ reposte 🙂

northumbrian

10 months ago

james
is simply wonderful
tamebay should pay him his comments are so good

“research we carried out among consumers showed that 76% of returns are initiated because the product was faulty or not fit for purpose. ”

Customers will often select a reason which makes it more likely the seller will pick up the cost of return carriage.

Article would be more useful if it focused on reducing returns and return costs, not just improving the return process in the hope of making a repeat sale. C’mon, we work hard and our experience is hard won – please respect that by doing better homework for next article.

Dave

10 months ago

Agreed. We buy, refurbish and re-sell returned CE stock. Generally, we find 12% of it actually being faulty. It’s as low as 2% on some product lines, as high as 25% on others.

So what does that make it, 9% of stock is returned because it really is faulty? The rest because they haven’t bothered to read the instructions or more likely, seen it cheaper somewhere else and made up some false problem and landed the cost of returning it with the retailer.

Retailers daren’t argue with their customers and just take it on the chin, putting the price up for everyone else.